Foreign Exchange forecast 10 July 2020
covering USD Index, EUR/USD, GBP/USD, USD/JPY, GBP/EUR
USdollar Index Weekly Dollar Index Price Risk Analysis Forecast
(Previous week in brackets)
USD Index | LT-M | MT-W | ST-D | |||
---|---|---|---|---|---|---|
96.65 (97.66) | ||||||
Trend | ↓ (↓) | ↓ (↓) | ↓ (↑) | |||
% Risk Weight |
32 (40) | 25 (28) | 20 (60) | |||
Allocation | 50% (50%) |
19 June: Some of the most highly regarded economists and financial market analysts are individually voicing strong opposing views for a vastly stronger or weaker dollar in the coming year. These opposite narratives influence risk management strategies and essentially proves the point how manipulated this market is by major governments and central banks. The intervention forces are hidden behind walls where credit lines are still available between major banks. This keeps the market liquid and floating. Interest rates no longer play a role in managing the value of a currency. The technical case still leans towards a weaker dollar but anything can happen. Our risk strategy is best left unchanged keeping a permanent 50% of an average expected exposure dollar receivables covered forward. Unless we see as major shift in the technical picture a percent or so up and down is no reason for an immediate update of this forecast
EUR/USD FX live price, Weekly EURO vs US Dollar Price Risk Analysis Forecast
(Previous week in brackets)
EUR/USD | LT-M | MT-W | ST-D | |||
---|---|---|---|---|---|---|
1.1290 (1.1165) | ||||||
Trend | ↑ (↑) | ↑ (↑) | ↓ (↓) | |||
% Risk Weight |
60 (45) | 73 (54) | 70 (40) | |||
Allocation | 50% (50%) |
19 June: We want to see a clean break of the 12 year downsloping resistance line, now at 1.1860, in order to confirm longer term dollar weakness and only if supported by a strong risk weight trend in favor of the Euro. The technical picture is trending down short term and up medium and long term. This favors the short term elastic to be drawn upward again and favors a stronger Euro in the next several weeks following a bottom formation at or just below the current level. No Change in keeping 50% of dollar receivables covered forward
Cable GBP/USD FX live price, Weekly Sterling vs USDollar Price Risk Analysis Forecast
(Previous week in brackets)
GBP/USD (Cable) | LT-M | MT-W | ST-D | |||
---|---|---|---|---|---|---|
1.2605 (1.2340) | ||||||
Trend | ↓ (↓) | ↑ (↑) | ↑ (↓) | |||
% Risk Weight |
48 (48) | 62 (62) | 88 (35) | |||
Allocation | 50% (50%) |
19 June: GBP has shown more volatility than other currencies vs USDollar. Risk weight still looks a little suspect to the down side shorter terem whilst long term is seeking direction in neutral territory. Same strategy to maintain a 50% cover on long dollar exposures
USD/JPY FX live price, Weekly USdollar vs Japanese Yen Price Risk Analysis Forecast
strong>(Previous week in brackets)
USD/JPY | LT-M | MT-W | ST-D | |||
---|---|---|---|---|---|---|
106.80 (106.75) | ||||||
Trend | ↓ (↑) | ↓ (↓) | ↓ (↓) | |||
% Risk Weight |
57 (54) | 27 (56) | 55 (12) | |||
Allocation | 25% (25%) |
19 June: Yen again followed a 180 degree path against the dollar index trend causing the Yen to rally versus all other currencies. Given the risk weight getting to oversold and nearing an important support area at 106.00 this is an opportunity to reduce dollar cover a little quicker by 25% to 25%. The anticipation of a weaker yen in months to come is driven by the wild fluctuations during the last 3 weeks which are not typical for a currency that deserves strong support. Hence a strategy to allow for this currency pair to settle and cover largely on spot basis
GBP/EUR FX live price, Weekly Sterling vs EURO Price Risk Analysis Forecast
(Previous week in brackets)
GBP/EUR | LT-M | MT-W | ST-D | |||
---|---|---|---|---|---|---|
1.1148 (1.1045) | ||||||
Trend | ↓ (↓) | ↓ (↑) | ↑ (↓) | |||
% Risk Weight |
40 (45) | 37 (55) | 85 (30) | |||
Allocation | 80% (80%) |
19 June: Short term GBP may bottom for a temporary trading run against the Long term trend. Medium term risk weight is neutral and currently up but coould as easily turn down again and help push GBP in to support at the 105 handle. If that happens and risk weight is very low we may switch from 80% cover to NO cover temporarily. For now the very long term chart image and tools favor a continuation of that very long term trend of Sterling devaluations. No Change
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